For those of you new to this website, in this post, I discuss the recent changes I made in my dividend portfolios and also discuss about my portfolio diversification strategies.
Stock markets were almost flat in August 2016. Most of my favourite dividend stocks look very expensive for me when I compare their price in early 2016.
And, everyone started to talk about next market correction. So, I didn’t pump any new money into the market last month.
I added few shares in my existing positions in my non-registered accounts using the dividends I received in June and July.
Also, added two ETFs (existing positions) in my non-registered accounts using the cash flow.
I guess this portfolio updates will be boring for next few months as I am currently focusing on debts payment instead of assets accumulation.
I think I’ve built a quite big portfolio, little above $200K, in just four years. Now I could let it grow organically without new money from my savings or debts.
200K portfolio looks very small for some of you, but it is pretty big for me as I was in negative net worth just 5 years ago.
Now let’s see the recent changes in my dividend portfolios in August 2016.
Please note this is not an investment recommendation website and I am not your financial Advisor. I am just sharing my personal financial journey with this website readers. I strongly recommend you to discuss with a financial professional before make any investment decision.
The changes made in Canadian portfolio in August 2016.
- added 25 shares of PWF at $30.03
- added 15 shares of CGX at $50.15
- added 5 units XRE at average price of $16.90
The changes made in U.S dividend portfolio in August 2016.
- added 3 units of IDV at $29.39
With the new assets purchase and recent dividend growth announcements, my estimated yearly passive income has increased to $7355.
I completed my accumulation in IDV ETFs as it reached my target of 50 units. From now, I am planning to purchase a health care ETF in my registered account.
Currently I don’t have any health care stocks in my portfolio.
I will keep purchasing XRE.TO until the number of units reach to 200 (and if the unit price stays below $17).
I have updated the portfolio pages with these changes.
Now, let’s look my portfolio diversification.
Portfolio diversification
Again and again, I will be the first to admit that a significant portion of my portfolio is built with Canadian dividend paying companies – most of the companies and their services I use or experience in my daily life.
But, when it comes to diversification I will be the also the first to admit that my portfolio is very poorly diversified – geographic wise and sectors wise.
More than 80% of my investments are in Canadian based companies. Now I stopped adding Canadian stocks in my portfolio. I am planning to concentrade in adding U.S stocks in my portfolio.
I have created a diversification strategic for my portfolios to minimize the investment risks, but I am not following my own strategic as I am still in asset accumulation stage.
Recent changes in my diversification strategic
In March 2016, increased my fixed income target asset allocation to 20% and reduced International stocks target asset allocation to 5%.
January 2016 – I have included my employer pension into fixed income category. The contribution I make into ,my employer pension plan is part of my assets, and it will definitely fit into the fixed income category.
Portfolio Geographical Diversification
| Country | Target asset allocation | Current asset allocation |
| Fixed income (bonds and pension) | 20% | 4.09% up from last update |
| Canadian stocks | 40% | 80.58% down from last update |
| U.S stocks | 35% | 13.82% up from last update |
| International stocks | 5% | 1.51% |
My Canadian portion of my investments have decreased a bit from my last update. It is a good news for me as I wanted to bring down its portion to 40%.
Portfolio diversification – sectors & fixed income
Actually, (I guess) there are only 10 sectors, but I have divided my dream portfolio by 15 sectors including fixed income/bonds/employer pension.
Please note this is not the way professional fund managers or experts diversify their funds. This is my own diversification strategy.
| Sector | Target asset allocation | Current asset allocation |
| Fixed income (bonds & Employer Pension) | 20% | 4.09% |
| Finance | 10% | 19.36% |
| Industrials & Infrastructure | 5% | 8.36% |
| Consumer Staples | 10% | 7.23% |
| Energy & Materials | 5% | 3.69% |
| Utilities | 5% | 14.05% |
| Pipelines | 5% | 12.94% |
| Consumer Discretionary | 5% | 3.34% |
| Health care | 5% | 0.0% |
| Information technology | 5% | 0.17% |
| Telecommunications | 5% | 6.40% |
| Real-estate | 5% | 7.99% |
| Miscellaneous & Preferred shares | 5% | 4.63% |
| Transportations | 5% | 6.25% |
| International & Diversified ETFs | 5% | 1.51% |
From the above table, you could easily see my poor portfolio diversification. Finance, pipelines and utilities are almost 50% of my total value. It is very risk approach!.
It is a big mistake I make now. But I have no choice as I am unable to move my Canadian dollars into U.S market to diversify due to the currency exchange rate.
However, I won’t sell holdings from over weighted sector and buy in under weighted sectors. But, I will try to balance my holdings by adding new units in the under weighted sectors.
This is the first strategy I developed for my portfolio diversification. It will evolve over time with the world economic conditions and my risk tolerance.
I will update my progress every month under the portfolio updates category.
Many readers asked me which tools I use for all these calculations.
Actually, I use Google Sheet which is available in the Google drive. It is free. All you need is a Google account.
Google Sheet is very similar to MS Excel but you could pull the stock market data from Google Finance to do all the calculations you need.
Please share your thoughts about my holdings and recent purchases. Also, do you have any diversification strategy? And how often do you balance your portfolio?
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